Consumer Protection in Private Health Insurance: The Role of Consumer Complaints. Oregon

The organization of health insurance complaints management in Oregon is relatively straightforward, compared to most of the other states studied. The lead agency is the Department of Consumer and Business Services. Within the Department's Insurance Division, the Consumer Assistance Unit is directly responsible for consumer complaints.

Complaints considered outside the jurisdiction of the Insurance Division include those relating to:

1. the Oregon Health Plan which among other things extends Medicaid eligibility to all state residents with incomes below the federal poverty level, and is administered by the Office of Medical Assistance Programs within the Oregon Department of Human Services; and
2. Medicaid - any complaints are referred directly on to the Oregon Department of Human Services.

The Consumer Assistance Unit deals with complaints about self-funded trusts identically to complaints about health plans, because of the sizeable number and growth of trusts. It contacts the plan administrator, attempts to iron out the problem and generally has outcomes similar to other health plan complaints. While the Unit will often receive quite substantive responses from these plans, the response letters regularly refer to the fact that the entity is an ERISA plan which is under no regulatory obligation to the Unit. The Unit also educates the consumer on regulatory authority and informs them of their right to seek assistance from the U.S. Department of Labor.

The Unit also handles Medicare supplement complaints, although the number has decreased substantially over the last decade, following federal action to standardize benefit packages. Oregon has an extremely active Senior Health Insurance Assistance Benefits (SHIBA) program, with the educational and outreach activities undertaken by this program helping to reduce complaints.

Complaints about Medicare HMOs are handled in the same way as those involving commercial HMOs. All the Medicare plans are owned by companies domiciled in Oregon, allowing the Unit to have reasonable leverage over them.

Ombudsman

Oregon does not have an Ombudsman program for insurance complaints. However in 1987 the legislature mandated the establishment of a Consumer Advocacy section within the Insurance Division (Senate Bill 323, ORS 705.117). Complaints from individual consumers are dealt with by the Compliance Officers in the Unit, whereas the Consumer Advocate takes a broader systemic approach. The Consumer Advocate reports to the Manager, Consumer Protection Section, separately from the Consumer Assistance Unit.

The 1987 Annual Report for the Oregon Insurance Division notes that the primary purpose of the Consumer Advocacy Section is to administer the Division's public education program, develop legislative concepts and make recommendations for administrative action to resolve consumer issues. Regulators noted that the position description for the Consumer Advocate has recently shifted somewhat to be more collaborative working within the Insurance Division, including examining trends in complaints, monitoring the implementation of the Patient Protection Act 1997 (SB21) and working closely with the market conduct section. Another new focus is to undertake more consumer outreach.

Under Section 20 of the Patient Protection Act a Health Care Consumer Protection Advisory Committee was established as a rulemaking committee to implement the provisions of the Bill. This Committee has since disbanded.

Unlike some states where health departments have a role in the quality regulation of HMOs, the Oregon Insurance Division has full jurisdiction over both traditional indemnity health plans and HMOs. The Oregon legislation uses the term "Health Care Service Contractors" for a HMO or other type of health insurance plan that contracts with doctors, hospitals and other medical providers to offer services on a prepaid basis.

One issue is the rapidly changing delivery system in Oregon which makes it difficult to keep up with newly emerging forms. Insurance plans are using "delegated entities" which involve paying capitation to an intermediary administrator of plans. These entities vary with some plans delegating functions such as utilization review, claims administration, customer service and referral management services. The degree of delegation varies by contractual arrangement. The Insurance Division position on delegated entities is that the authority is clear. While delegated entities may act as agents of the insurers, the insurer is bound to do business as regulated by the Division and is ultimately responsible for the performance of any functions it delegates or contracts out. In addition, the Division is undertaking an audit of delegated functions during current market conduct examinations.

Health insurers are required under the Patient Protection Act 1997 (PPA) to disclose certain information, including publicizing the existence of the Insurance Division. Most commonly, this is included in Member Handbooks, but some companies are also putting the information in their explanation of benefit reports. The PPA also puts an obligation on plans that where grievances are upheld, the plans are required to advise their members of their right to seek assistance from the Insurance Division.

The Insurance Division also interacts with the industry through formal channels including the Insurance Advisory Committee which meets quarterly to discuss issues across all lines of insurance. In addition to representatives from the insurance industry, agents, business/labor and consumer representatives participate in this forum.

Introduction

The Insurance Division produces (or disseminates) three different reports containing complaints data:

1. Consumer Guide to Oregon Insurance Complaints (Attachment 1);
2. Oregon Complaint Report Part II (Attachment 2); and
3. Insurance Company Annual Reports (Attachment 3).

In brief, the Consumer Guide to Oregon Insurance Complaints is the annual complaints "report card" providing comparative complaint indices and rankings, organized by line of business, including health insurance plans and Health Care Service Contractors (HCSCs). The Part II report provides a more detailed listing of all consumer complaints filed against every insurance company with the type and disposition of each complaint, but is not designed as a comparative report. The Insurance Company Annual Reports are prepared by health plans, as a requirement of the Patient Protection Act 1997, and include grievance statistics, utilization review summaries, quality assessment summaries and scope of network summaries. These reports are available on the Insurance Division's internet site for individual plans, with no summary report available across all plans.

For each of these reports this study describes the major features, analyzes the data, and assesses the usefulness of the report from both the perspective of consumer friendliness and its value in monitoring the implementation of patient protection legislation.

Publications

The Insurance Division produces the following material relevant to health insurance complaints:

Consumer Guide to Oregon Insurance Complaints - This is the most popular of the complaints publications. In the three weeks since the report covering 1998 complaints became available, the Division mailed out 1,800 copies. The Unit receives written and phone requests with publicity also generated through the SHIBA program. The demand for hard copy reports may be decreasing slightly as more people access the report electronically. However it is not possible to measure the number of Internet hits to the specific Guide page.

Oregon Complaint Report Part II - While this report (costing $25) is distributed to all major libraries in the state, it does not generate substantial demand (possibly 25 requests annually). It appears to be most popular with insurance companies and other groups interested in monitoring the relative performance of insurance plans including differences in the disposition rates of complaints. It does not appear to be requested by individual consumers.

Oregon Insurance Division - Protecting the Insurance Buying Public - This brochure lists the general services provided by the Division and contact details.

Free Help with Medicare and Other Health Insurance Brochure - This brochure explains the SHIBA program, its services and provides sponsor contacts.

Demand for Publications

The Insurance Division provided the following estimate of the 1999 publication distribution based on inventory tracking (as at 11 February 2000):

• Protecting the Insurance Buying Public - 5,250 copies distributed;
• Consumer Guide to Oregon Insurance Complaints - 2,410;
• Consumer Guide to Medicare Supplement Insurance - 14,200;
• Free Help with Medicare and Other Insurance - 15,000;
• Your Medicare Health Plan Choices - 7,300; and
• Long Term Care Insurance - 6,000.

Outreach

The Insurance Division does not have a Speakers Bureau, but this responsibility falls within the Consumer Advocate position for health insurance. While a more active public speaking function is under consideration, the current focus is on developing more hard copy consumer brochures.

Media

The Commissioner is tending to take a more proactive position. The Division issues press releases for almost all significant actions taken against insurance companies to promote public awareness. The Consumer Guide to Oregon Insurance Complaints is also heavily publicized in the media.

Staffing

The Consumer Assistance Unit (which does not include the Consumer Advocate position) has nine staff, including the Manager. This represents a 50% increase, up from 6 staff, in 1987. Of the staff, three are employed full-time on life & health complaints, 5 work on property and casualty complaints, while the Manager works across all insurance lines.

Financial Savings to Consumers

The Annual Report noted that in 1998 the Division was responsible for the recovery of $6.9 million in claims for consumers across all insurance lines. However this performance measure is not promoted strongly as there are various definitional issues.

External Audit

The Unit has not been subject to external audit. The Oregon Insurance Code gives the Commissioner overall responsibility for protecting insurance consumers, with the legislation not specifying a requirement for a consumer protection unit per se.

Consumer Satisfaction Surveys

The Unit has not undertaken consumer satisfaction surveys on a regular basis. One previous postcard survey was undertaken with a low response rate, although good outcomes. The Unit largely relies on internal mechanisms of providing explanations to consumers if their complaint cannot be resolved and why.